A California employment law that gives workers more leverage when they’re mistreated by employers has caught the attention of the U.S. Supreme Court, and the docket reflects a flurry of arguments filed by many interested parties — often representing businesses.
As advocates for California workers, we’re following the issue closely. The high court is expected to make a decision by the summer.
At issue: The California Private Attorneys General Act, better known as PAGA, which provides a way for wronged employees to recover civil penalties — even if they had signed an employment contract with a mandatory arbitration clause.
Such clauses, popular among employers, force workers to bring up individual claims privately with an employer and an arbitrator — not in courts, and not as a group representing multiple mistreated employees. The Federal Arbitration Act broadly supports arbitration agreements as a way to keep potentially lengthy employment disputes out of the courts — but its application has broadened over the past few decades. Mandatory arbitration tends to stack the deck in favor of businesses, with no venue for employees appealing poor outcomes, and such clauses are present in so many take-it-or-leave-it contracts that people often don’t realize all the rights they’ve waived. Mandatory arbitration also may involve significant up-front costs, and it denies people the right to seek justice through the courts, among other flaws.
California offers a way around that through PAGA, which lets an employee bring an action against an employer on the state’s behalf — as a sort of private attorney general. If money is recouped as a result of state labor code violations, the state gets 75 percent and the involved employees get 25 percent. That may sound like a small portion, but often it is the most promising option and yields not-insignificant payments for wronged workers.
The case that finally caught the eye of the U.S. Supreme Court, Viking River Cruises Inc. v. Moriana, involves Angie Moriana, who worked for about a year as a sales representative for Viking, which offers travel in various locations around the globe via its fleet of ships. Moriana says she wasn’t paid everything due to her, didn’t get meal and rest periods, and didn’t receive accurate wage statements. She submitted a PAGA notice to the state Labor and Workforce Development Agency, which didn’t respond within the allotted time, allowing Moriana to pursue the matter in state court.
To summarize the case in broad strokes, Viking wanted the courts to compel Moriana to submit to the arbitration she had agreed to as a condition of employment, but her lawyers argued that doing so would essentially prevent her from pursuing any of the protections offered under PAGA. The lower court said the piece of her contract that prevented all PAGA action was invalid, and the California Supreme Court said it would not review the case.
Viking maintains that California’s PAGA conflicts with the purposes of the FAA
With the U.S. Supreme Court taking up the matter, parties interested in other pending PAGA cases have filed briefs, as well. Notable names include Uber Technologies, Postmates, the California New Car Dealers Association, the U.S. Chamber of Commerce, and the Restaurant Law Center, among others.
Several of those groups also are trying to attack PAGA via the ballot box in November.
It’s a complex issue, with the high court’s decision holding significant ramifications for California workers — and for other states considering legislation similar to PAGA.
If you are in conflict with a current or former employer, the experienced employment lawyers at Keller Grover can help. We offer free consultations to help you understand your rights, protections and options. In more than 25 years litigating fraud and employment cases, we have recovered hundreds of millions of dollars for clients and class members.